1. Risk Adjusted Data South Carolina Association of Health Care Quality

2. What is Risk Adjustment Can Risk be Managed? –Going beyond your best guess

3. Some Examples of Risk Management Project Management Any Insurance Public Relations Investing –The event causing the risk. –The likelihood of the event happening. –The impact on the plan if the event occurs

4. Why Medicine? Doctor – You have higher X when compared to Y My patient’s are more complex and sicker Question is this really true –Enter Risk Adjusted Data Used to compare one provider to another

5. Process of Risk Adjustment Must have an adequate risk assessment tool. Must segment populations in meaningful ways. Develop a system to normalize the population. Reward or dissuade risky behavior.

6. Criteria for assessing Risk Adjustment tools

7. Mechanism of Risk Adjustment

10. Going National

11. The Basic Tool DRG -> Risk Adjusted DRG

12. Hx of DRG Developed in 1967 –Introduction of Medicare Hospitals required to implement Utilization Review Also implement Quality Assurance Programs Intentions –Inclusion of all hospital services –Incorporate thousands of diagnoses and procedures –Account for multiple diseases and treatment of individual patients –Differentiate between high and low cost care –Create clinically meaningful catagories Followed ICD-9 Methodology –Developed 23 Major Diagnostic Categories –Identified patient clusters based on secondary dx, procedures, sex age, discharge status, complications comorbidities to sort out similar LOS and resource consumption

13. Advent of HCFA-DRG Original DRG system flawed –Found to be highly variable –Did not capture severity of illness –Relative weights based on unreliable data –Too slow to keep pace with rapid change HCFA adopted DRG system as payment for hospitals in 1983 –Took ownership of ensuring annual updates –Reimbursement for hospitalization based on the reason for hospital stay. –Split out procedure codes to be maintained separately

14. Refined DRG Soon became evident the presence or absence of complications and comorbities (CC) resulted in assignment of different DRG for certain patients –Defined a CC as a secondary diagnosis that specifically increases hospital resource use. –System modified to account for four levels of CC Non, Moderate, Major, Catastrophic –Ran pilot studies, but never adopted this modification Only utilized one CC to modify DRG to Highest level

15. All Patients DRG Adopted by New York State as the payment system for all non-Medicare patients in 1987 –Found DRG system was inadequate to classify resource consumption for: Neonates HIV infected patients –NY state contracted 3M to modify DRG system Added Pediatric modified DRGs MDC 24 for HIV infection CC List modified gave rise to MDC 25 –Transplants –Long term vents –Cystic Fibrosis –Nutritional Disorders –High risk OB –Acute Leukemia –Sickle Cell Anemia

16. All Patient Refined DRG Widely used in US, Europe, parts of Asia Uses Base of AP-DRG system Developed by 3M in 1990 Added four subgroups attempting to describe Severity of Illness Resulted in significant change to group logic –All age and CC distinctions are removed –Replaced by two groups Severity of illness 1-4 Risk of Mortality 1-4 Subgroup assignment is based on the interaction between: –Secondary diagnosis –Age –Principle diagnosis –Presence of certain non-operative procedures

17. Intent of APR-DRG Compare hospitals across wide range of resources and outcome measures Evaluate the differences in inpatient mortality rate Implement and support critical pathways Identify continuous quality improvement projects Form the basis of internal management and planning From 3M

18. APR DRG Classification Data Elements MDC Major Diagnostic Category APR DRG Assignment Four Severity of Illness Subclasses 1.Minor 2. Moderate 3. Major 4. Extreme Four Risk of Mortality Subclasses 1.Minor 2. Moderate 3. Major 4. Extreme

19. Does Severity Adjustment really make a difference

20. Mortality in Severity of Illness -- SRHS

21. Mortality in Mortality Risk -- SRHS

22. LOS in Severity Adjusted-- SRHS

23. LOS in Mortality Risk -- SRHS

24. Pattern in Most Hospitals

25. SRHS Severity of Illness – All Patients

26. SRHS Mortality Risk – All Patients

27. Big Deal, What can I do with this Knowledge

28. Case Management Perspective

29. Discharge Planning

30. Disposition is not an Issue

31. Age NICU Babies Pre term PSYCH Oncology with Surgery PSYCH & GI Procedure

32. 56% of Outliers in 4 Units

33. But I Admit more then others

34. Patient Mix

35. Costs

36. DRG Specific Cost Comparison

37. Compare Your Processes

38. Refine the Search 117 125 132 552

39. Get to the Details DRG 117 Revision of Pacer (Few Patients) –2 docs in SI Moderate 1. avg cost $3,500 2 avg cost $12,300 – Higher utilization of resources Xrays, Labs LOS 5 days vs 3 DRG 125 Heart Dz w/o MI & wCath –7 docs in Group 3 Avg Cost $4500 1 pt with cost $15,000 complication of Malignant Htn DRG 132 Atherosclerosis with CC –Group 3 - 1 pt expired with long LOS and MR 4 –Group 2 – One physician Avg cost $12,500 vs, $3,000 Medication profile DRG 552 pacer w/o other major CV dx. –Group 2 two main physicians one uses more expensive device –Group 3 1 pt longer LOS

40. Really Why should I care CMS Is Changing the Rules

44. Refinement of the Relative Weight Calculation Pattern of increasing Medical weights and lowering Surgical weights remains Transition period mitigates swings in payment Process: 1. Standardized charges were broken into 13 cost buckets 2. National Cost-to-Charge Ratio was used to convert charges into costs 3. Standard methodology to create the weights was used Hospital Specific Relative Value (HSRV) methodology will NOT be used in FY 2007 Independent contractor will evaluate charge compression with HSRV

45. Refinement of the Relative Weight Calculation Implementation of a cost-based weight methodology over a 3 year transition period Year 1 – Weights based on a blend of: – 33% cost based weights – 67% charge based weights Year 2 – Weights based on a blend of: – 67% cost based weights – 33% charge based weights Year 3 – Weights based on 100% costs

46. Do Severity and Risk Adjustment Make a Difference?

47. Application of Final Rule DRG 148 (Major small and large bowel procedures w/cc) – CMS medical advisors felt the presence of major gastrointestinal diagnoses identifies patients with a higher level of severity.

48. Pattern in Most Hospitals

49. Follow the Money

50. Severity Adjusted DRGs – On Hold

51. What Questions Does your Organization Need to ask

52. Present on Admission Deficit Reduction Act of 2005 (DEFRA) –Requires Present on Admission (POA) indicators to be collected for all Medicare patients beginning this Oct. –Requires CMS to select 2 or more infectious that are high cost/High volume to focus on. –Require CMS to begin excluding those infections when the are identified as not present on admission from the calculation of the DRG beginning Oct 1 2008

53. Case Example No Complication Current Payment with Complication Simulated Payment Hosp Acquied Infection Principle DiagnosisAtrial Fibrillation Atrial Fibrillation (POA) Secondary DiagnosisPneumonia (Not POA) ProceduresTemp Pacemaker Mechanical Ventilator Medicare DRG Cardiac Arrhythmia W/O CC Medicare Weight0.52270.82870.5227 Reimbursement$3,839$6,086$3,839

54. Risk Adjustment for Quality Indicators Agency for Healthcare research and Quality released comprehensive set of quality indicators intended to flag potential quality problems. UCSF - Stanford Evidence based Practice center developed these indicators using APR-DRGs as the basis for risk adjustment

55. Preparing for Report Cards Hospitals must: Be proactive in evaluating data –Prevent surprises: Anticipate your performance ratings –Prepare well-planned responses to negative ratings –Develop improvement programs to correct any identified problem areas Invest in the quality of medical records, documentation, and information systems –Severity-of-illness and risk-of-mortality adjustments require a thorough reporting of patients’ diagnoses –Incomplete coding can negatively affect the evaluation of the institution on the report cards

56. Step One

57. Public Reporting of Data

58. Change Pattern -- Volumes

59. Yes Education Is a Good thing Change in percent of total

60. Change Mortality Pattern

61. Total vs. Ratio (Act/Exp)

62. Ratio of actual to expected

63. Risk Adjustment Length of Stay

64. Remember Newton’s Third Law "For every action, there is an equal and opposite reaction."

65. Coded Complications Nervous System Complications 4.5  Cardiac Complication 4.1  Peripheral Vascular Complications 4.4  Respiratory Complications 4.0 

66. What Have We Learned My kids would say nothing.